US-China tech war: Beijing urged to pump money into innovation for clearer edge over top rival

Some US$295 billion in annual government funding for new tech and taxing use of foreign know-how among suggestions from Tsinghua economists

Tech rivalry with the US can have huge impact on global economy and must be handled carefully, Beijing forum hears

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A smartphone producer in China should have at least 30 per cent of its devices made with Chinese chips, an economist has suggested. Photo: AFP

Published: 6:11pm, 15 May 2022

China should boost funding for key innovative capabilities and ensure market share for local products as tech rivalry with the US deepens, leading Chinese economists suggested.

Ju Jiandong, a professor of finance at Tsinghua University, said the Chinese government should invest 2 trillion yuan (US$295 billion) annually in the next 10 years to boost local technology development and thereby spur GDP growth.

To break the monopoly of international technology on the Chinese market, companies could also be taxed extra if more than 70 per cent of their products depend on overseas technology, Ju told the Tsinghua PBCSF Chief Economists Forum in Beijing on Saturday.

“A smartphone producer in China should have at least 30 per cent of its devices made with Chinese chips. Or a punitive tax should be charged,” he said.

“We must secure a certain market share for local products to be competitive. We should ensure that foreign core technology has no more than 70 per cent of the Chinese market share, and Chinese technology must hold at least 30 per cent of the local market.”

Ju noted that the trade war had seen the United States tend to clamp down on leading Chinese companies capable of challenging its technology monopoly, such as Huawei Technologies. This was aimed at maintaining the US’ hold on the global core technologies market and cutting off upgrade pathways for Chinese technologies, he explained.